Cells in the ciliary epithelium (CE) of the eye can clonally expand in culture to produce spheres of cells that differentiate into retinal neurons and glia. It is believed that these spheres are produced by retinal stem cells (RSCs) and hold promise for cell-based therapies to treat degenerative retinopathies. To improve our understanding of RSC expansion and differentiation, we have carried out a series of preliminary studies on human and mouse CE-derived spheres. Our data have led us to reconsider the current retinal stem cell model and to propose a new hypothesis on the expansion and differentiation of CE-derived cells. We propose that the pigmented CE cells rather than RSCs, expand to form spheres and subsequently transdifferentiate into rods, bipolar cells and Muller glia. This proposal will test if CE-derived spheres form by proliferative expansion of pigmented CE cells or by an RSC mechanism (Aim 1). Culture experiments and in vivo transplantation studies will also be done to test whether pigmented CE cells transdifferentiate into retinal neurons and glia, or if those cells are produced from retinal stem/progenitor cells (Aim 2). Distinction between these 2 hypotheses must be made, because the pathways regulating proliferation and differentiation in retinal stem/progenitor cells differ from those in epithelial cells, and efforts to optimize expansion and differentiation of CE-derived cells must focus on the pathway that reflects that system's biology. The successful completion of these experiments may substantially affect future development of cell-based therapies for millions of people worldwide who suffer from retinal degeneration. This research proposal will also move the RSC field forward by resolving several outstanding questions regarding the proliferation and differentiation of CE-derived cells in culture and in vivo.